Duty free spend per passenger down 16% at TAV Airports in 2018

TURKEY. TAV Airports has reported a 16% year-on-year decline in duty free spend per passenger in 2018, to €11 (from €13.10).

The airports company said this was mainly due to the depreciation of the Turkish Lira, which impacted Turkish passenger spend. It also noted weaker spending among other European visitors.

TAV Airports’ ATÜ Duty Free joint venture with Gebr Heinemann-controlled Unifree Duty Free operates the travel retail business at its Turkish airports, including Istanbul Atatürk.

The ATÜ Duty Free performance in 2018. Source (all charts): TAV Airports. Click to enlarge.

Passenger traffic at TAV’s airports increased 31% to reach 152 million. This figure includes Antalya Airport. TAV purchased a 50% stake in the company operating the airport, ICF Antalya, in May 2018 for €360 million and added the fifteenth airport to its portfolio[Fraport holds the remaining stake]. Excluding Antalya, like for like organic growth in passenger traffic was 8% in 2018.

Despite the impact of the Turkish Lira devaluation, TAV Airports revenue increased 4% to €1,181 million, while EBITDA was up 13% to €573 million. Net income grew 46% to reach €255 million.

Click to enlarge.

In a statement, TAV Airports Holding Executive Board Member & CEO Sani Sener said: “In 2018 we succeeded in all three pillars of our strategy for growth. We were able to realise value accretive inorganic growth, [while] organic growth turned out strong. 2018 became our best year so far both operationally and financially.

“As the third pillar of our company’s growth strategy, the service companies now comprise 37% of our combined revenue. TAV Operation Services bought the majority shares of Spain-based company GIS, which owns brands like Premium Traveler and HelloSky and accelerated growth in South America and Europe. The footprint of TAV service companies comprising ATU, BTA, Havas and TAV Technologies reached 76 airports in 21 countries including Denmark and Indonesia.

“As Turkey’s value proposition in tourism became more evident in 2018 with lower prices, Turkey again became very attractive for tourists from all parts of the world. In 2018, European visitors to Turkey increased 33% while Russian tourists increased 26%. Visitors from the rest of the world increased 8%. With this strength in tourist arrivals Turkey reached all-time highs in tourist numbers. With the value proposition still continuing, we expect another very strong year in tourism in Turkey in 2019.”

TAV Airports Holding Executive Board Member & CEO Sani Sener: “In 2018 we succeeded in all three pillars of our strategy for growth.”

Sener noted that TAV’s contract at Istanbul Atatürk Airport ends in January 2021. The airport will be closed to commercial traffic as Istanbul New Airport becomes fully operational. The State Airports Authority will compensate TAV for a loss of profit arising from a lost period of operation at Atatürk.

“The determination of the amount of compensation is a technical matter which is being detailed out between KPMG which advises us and PWC which advises the State Airports Authority,” he said. “We have coordinated very carefully with the human resources of the new airport to make a smooth transition possible for our employees. We invested in a new headquarters building in Vadistanbul because we have to vacate our headquarters in Istanbul Atatürk Airport.”

Passenger traffic grew in 2018, buoyed in part by the consolidation of Antalya Airport figures from May. Click to enlarge.

Looking ahead, Sener added: “Due to the special situation of Istanbul Atatürk Airport, we have provided our 2019 targets without including any contribution and/or effects related to Istanbul Atatürk regarding both passenger numbers and financial results. Thus, excluding passengers served at Istanbul Atatürk in 2019 we are guiding for 90 to 94 million total passengers served. Excluding any EBITDA generated from Istanbul Atatürk in 2019 and excluding any financial effects related to compensation negotiations, we are guiding for a 38-42% decrease in consolidated EBITDA.”

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